Shareholders Restive At Utc Meeting

April 10, 2003|By MICHAEL REMEZ; Courant Staff Writer

NEW YORK — United Technologies Corp. shareholders came close to approving a non-binding resolution Wednesday calling on company directors to let them vote on lucrative severance agreements for senior executives.

The proposal, offered by the AFL-CIO, received about 47 percent of votes cast at the annual shareholders' meeting, falling just short of the majority required for passage, but George David, UTC's chairman, said the company would review the current policy.

FOR THE RECORD - Correction published April 11, 2003.United Technologies Corp. announced Wednesday that it is increasing its quarterly dividend by 10 percent to 27 cents a share. The size of the increase was reported incorrectly in a story on Page E1 Thursday.

David told shareholders that the policy, implemented in 1981, had been in line with peer companies. The policy includes a cash payment of three times annual salary and bonus.

Still, David said the executive compensation landscape has changed in recent years, and the program is ripe for review. Twenty-seven executives are eligible for the program. The board of directors asked that the proposal be voted down.

The proposal, which is also being pushed at other companies, would have sought a shareholder vote on any severance equal to or higher than the present policy.

Also Wednesday, David said the company will increase its quarterly dividend by 10 cents, to 27 cents a common share.

In a lightly attended session in the theater of the American Museum of Natural History, David highlighted the accomplishments of UTC's divisions in a business climate that continues to be tough and uncertain, especially in commercial aerospace. He said the diversity of the company's businesses -- in products, in geography, and in the division between commercial and government work -- has helped maintain UTC's earnings growth and stability.

Divisions such as Pratt & Whitney and Hamilton Sundstrand, hard hit by the troubles facing commercial airlines, have been helped by their increasing work on U.S. military contracts, he said. And Otis Elevator has seen solid sales in Asia, especially in China, to help make up for slower building in the United States. David reaffirmed the company's outlook for the year, saying he expected earnings per share to be between $4.55 and $4.80.

Still, he said the duration of the Iraq war and the depth of woes for the world's airlines could force a reassessment.

Shareholders overwhelmingly rejected two resolutions. One called for disclosure of top executive pay packages beyond the top five executives required by the Securities and Exchange Commission.

The other would require the company to issue a detailed report on its work on space weapons programs, including ``the ethical and financial reasons'' for being involved in the programs.

Neither got more than 7 percent of votes cast. As with these two resolutions, directors recommended voting against the AFL-CIO proposal, which would affect future severance packages, but it received significantly more support.

The Investor Responsibility Research Center in Washington says that about 18 major companies face similar resolutions this year. Shareholders at Tyco International and Hewlett-Packard have approved non-binding proposals.

Carol Bowie, director of governance research services for the center, said the resolutions grew out of anger over the corporate scandals of recent years and the impression that huge severance packages or golden parachutes can reward failed managers.

Referring to UTC, Bowie added: ``This is not a company that has come under the gun for its practices in this regard, yet this proposal attracted a remarkable level of support based on historical trends.''

She was not surprised that David pledged to review company policy.

``Very few companies are thumbing their noses at shareholders this year,'' Bowie said.